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Summary

Kenya’s ICT sector has recorded high growth since the landing of submarine cables in 2009. The increase has been attributed to a significant reduction in the cost of international bandwidth and active regulation, which has spurred competition. The sector continues to attract investments and the future looks promising, but some challenges need to be tackled to unleash the market’s potential.

Kenyan ICT sector grows amid challenges

Kenya continues to record increased foreign direct investment (FDI) with a good share channeled towards the ICT sector. The country’s key strengths in attracting foreign investment include its central position as the entry point to other markets in the region and the availability of educated and highly skilled personnel. Its greatest weaknesses are reflected in its poor rankings in corruption-related matters and the World Bank’s ease-of-doing-business index.

The country’s ICT sector is advanced in comparison to other markets in the region. With a population of slightly over 45.5 million, Kenya has over 85% mobile penetration and over 72% Internet penetration. More than 35 million mobile subscribers are shared among four operators: Safaricom (67%), Airtel (20%), Orange (11%), and Equitel (2%). The country scores highly among its peers in terms of innovation, especially in mobile sector with the development of a range of products and services in mobile financial services, agriculture, health, and education.

Key growth drivers include a huge demand for ICT services, improved ICT infrastructure, the need for financial inclusion which has led to growth of mobile financial services, the creation of innovation and incubation hubs that provide young people with facilities and guidance to develop ideas in ICT, and initiatives to deliver services to citizens through e-government and m-government platforms.

The Kenya National ICT Master Plan 2014–2017, launched recently by the ICT Authority (ICTA), outlines a plan to transform the country into a regional technical hub, raise its competitiveness, and align the country with Kenya’s Vision 2030 ICT goals. Several flagship projects are already being implemented, though it remains unclear whether they will be completed within proposed time frames.

The Communications Authority (CA) of Kenya is fairly independent and has been very active in drafting regulations aimed at promoting competition, which helps explain why Kenya’s ICT sector scores very well when compared to other African countries. However, the CA faces challenges as well, especially in curbing the sale and use of fake mobile devices, use of unregistered SIM cards, and eliminating SIM Box fraud. To deal with some of these issues, the regulator might need to collaborate with other government agencies.

The Kenyan government and the private sector have collaborated to develop ICT skills in the country. For example, the Presidential Digital Talent Program (PDTP) aims to ensure that ICT graduates get skills through internships that they can apply in the job market. Other initiatives include Safaricom’s Women in Technology (WIT) program and the Samsung Academy, which trains university engineering students to develop ICT skills.

Appendix

Author

Danson Njue, Analyst, Middle East & Africa

danson.njue@ovum.com

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